Ultimate Guide To Bankruptcy Recovery

A home buyer should know that there are 2 stages to mortgage loan approval. We have heard of preapproval. When the buyer submits the loan application to his loan officer for preapproval, Stage 1 begins.

A pre-approval is a “walk-through” mortgage approval that says — at a given purchase price and downpayment amount — the home loan application will very likely be approved.

This preliminary approval becomes obsolete once the buyer signs a purchase agreement. Stage 1 is now over because the buyer must now secure the actual loan from an “underwriter” and not the loan officer.

During the second phase of the approval process, a mortgage underwriter is reviewing income, assets, credit, job history, and other items, too; the underwriters job is to make sure that the buyer meets the bank’s criteria for lending.

This procedure should be a formality if the Stage 1 loan officer did an appropriate job. Usually this stage moves along as anticipated. However, sometimes the buyer changes his loan “risk” without intending to do this, but affecting the mortgage approval. The buyer doesn’t mean to decrease his loan probability, it “happens.”

So, consider this a quick primer of what not to do while you’re between Stage 1 and the completion of Stage 2 of the home loan approval process. Following these pointers will help keep the risk profile consistent.

1. Don ‘t miss a payment to a creditor 2. Don’t transfer large amounts of money in or out of your bank accounts (large may have different meanings to different people) 3. Don ‘t accept gift of cash without talking with your loan officer first (There are rules for gifts) 4. Don’t buy a new car (or increase loan or lease payment) 5. Don ‘t quit your job or change career(don’t switch to a “commission” job ) 6. Don ‘t open a new credit card (no matter the deal)

There’s other items, too, but this a good start. Now, avoiding these mistakes may not be practical for everyone. Therefore, if you know you’re going to violate a “rule”, check with your loan officer first. There are a lot of “gotchas” in mortgage lending and it helps to have professional guidance for your individual questions.